An image from Nuuly's advertising campaign.

Nuuly, Urban Outfitters Inc.’s ambitious new stand-alone subscription rental business, leverages the company’s three brands — Anthropologie, Free People and Urban — by putting their products into rotation, while also layering on apparel from other sources, with the goal of targeting a wider audience than simply the range of ages across its three brands.

The last time Urban launched a new brand was BHLDN in 2011, and prior to that, Terrain bowed in 2005. While Nuuly doesn’t have a physical presence — at least not yet — it’s still a big deal.

Betting on the growing appeal of subscription rental services, Urban expects Nuuly, which charges $88 a month for a box of six items, to do significant business. Nuuly is targeting 50,000 subscribers in the first 12 months after the launch, which translates to revenue of $52.8 million, said David Hayne, chief digital officer of Urban Outfitters Inc. and president of Nuuly.

Customers receive more than $800 worth of initial retail value per box on average for the $88 a month, the company said. Subscribers can wear the styles as often as they want and trade them in the following month, infusing newness and variety into their wardrobes. If a customer falls in love with an item they’re renting, they can purchase it.

“We wanted to launch simply with a very understandable proposition,” said Hayne. “In the future, we could add more tiers or the ability to swap items mid-month. We have the advantage of having built the software and logistics ourselves, which will allow us to evolve the program. If we hear that people want more flexibility or more merchandise in each box, we’ll respond.

“We’re always interested in trying to give our customers what they want,” Hayne added. “We’re celebrating our 50th year. We’ve evolved into different lifestyle categories for different consumers. We’ve heard over the last few years that consumers have gotten more interested in subscription-based and rental platforms. We felt it was a good idea for Urban to get involved.”

Hayne broke down the apparel offering. About one-third is from Urban’s three brands, while under two-thirds comes from 100 to 150 brands. The latter includes fashion and streetwear from global athletic brands such as Reebok, Fila and Champion, and denim such as Wrangler, DL1961, Paige, AYR, Citizens of Humanity, One Teaspoon, Agolde, and Levi’s, as well as a curated, yet expansive, assortment from contemporary brands and designers such as Universal Standard, Naadam, LoveShackFancy, Chufy, Gal Meets Glam, Ronny Kobo and Anna Sui.

A vintage Yves Saint Laurent jumpsuit from the Eighties. 

On top of that, there are about 100 rare vintage pieces, including Yves Saint Laurent‘s Eighties Variation confetti print jumpsuit, Loewe‘s Seventies silk doll face-print dress and Lee’s Fifties denim overalls.

Hayne said, “We thought of who else would make sense that our sister Urban brands don’t carry. What our brands have been good at is homing in on specific life stages. Urban is around 18 to 24, Free People is the young woman, 25 to 35, and Anthropologie is more of a customer who has a family, 30 to 45. We want Nuuly to be able to span a slightly wider audience.”

A sliver of the assortment is on the edgier side, and there’s a segment that’s geared to a more mature Anthropologie customer. “We hope it caters to several different types of fashion aesthetics,” Hayne said.

Algorithms will tee up and suggest items for customers. Nuuly skews “more on the everyday side of things,” Hayne said. “We’re not going to have a massive amount of special occasion styles. It’s more casual.”

Nuuly required a considerable investment of time and money in the technology infrastructure. The business takes a data analytics approach. “We built the entire platform and all the logistics and software,” Hayne said. “We have a new warehouse outside Philadelphia that’s exclusive to Nuuly with laundry and dry cleaning facilities. We have to track garments individually. We have to know how many times garments have been rented. There’s a considerable amount of thought and effort and complexity.”

Launching with 1,000 items in sizes 00 to 26, including substantial selections of petite and plus-size apparel, Nuuly plans to add 100 pieces each week with the goal of having in the 3,000-item range by the end of the year. The number of units Nuuly is buying ranges from 50 to 100 units of a certain choice or colorway.

A showroom manager who worked with Nuuly buyers for the first season, and who requested anonymity, said, “We just started working together this season, they have placed two to three orders. It seems like they are going to treat the brands really well and the set-up process has been great. I’m excited to work with them because I feel like that’s the way retail is going to go.

“They are buying more feminine styles but are definitely not afraid of buying brands that are quite edgy,” added the showroom manager, who oversees sales for trendy brands that are sold at Opening Ceremony and Assembly NY. “They are looking for interesting products that are not already oversaturated in the market. I don’t think that this is something that will help a brand explode but it will definitely help new brands financially. They say they will provide a lot of feedback from customers and for young designers that is good on a pragmatic level.”

Consumers, particularly Millennials, are responding to subscription boxes’ gentler impact on the environment and diversity of styles that allows them to refresh their look often without a big investment. That’s fueled the growth of Rent the Runway and Stitch Fix, which went public in November 2017. The popularity of those brands begat services such as Express’ Style Trial, American Eagle Style Drop, Infinite Style by Ann Taylor and Infinitely Loft.

“One of the interesting and exciting things is that Nuuly gives consumers and Urban an additional business model that has a more sustainable angle to it,” Hayne said. “Consumers can get the fashion fix they’d like and wear more variety, without upfront purchases. It doesn’t bring the stigma of the fast-fashion mind-set.”

Nuuly merchandise will be shipped to subscribers in bags made of 100 percent post-consumer ocean waste plastic. The bags are sent to the company with returns and washed for additional usage.

There are no immediate plans for stores, but physical locations for subscribers to drop off or pick up boxes “could be interesting. One of the reasons this model makes sense is we have a physical presence with 500 [stores] and might consider that option in the future,” Hayne said. “We made the decision to operate this business ourselves because it has long-term potential and we believe in the model.”

 

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